• 09 October, 2024
News

SFC to Release Comprehensive List of Unregulated Crypto Platforms

SFC to Release Comprehensive List of Unregulated Crypto Platforms

Taking a significant step to strengthen its regulatory framework, Hong Kong’s Securities and Futures Commission (SFC) announced plans to unveil a comprehensive list of virtual asset trading platforms (VATPs). This list will categorize the platforms into those that are licensed, pending licenses, or shutting down. The SFC will also maintain a separate list of “suspicious VATPs,” which will be made publicly available on its website.

During a September 25 press conference, SFC’s CEO, Julia Leung Fung-yee, emphasized the importance of license applications. She clarified that being an applicant does not necessarily imply full compliance with SFC regulations. The conference was part of the SFC’s response to public demand for greater transparency, especially in the wake of the JPEX scandal.

The SFC’s announcement comes on the heels of the JPEX crypto exchange scandal, which has had a financial impact estimated at around $178 million. The Dubai-based exchange abruptly ceased some of its operations and increased withdrawal fees due to a liquidity crisis.

Highlighting the serious nature of the incident, the SFC noted this in a statement, stating: 

The JPEX incident highlights the risks of dealing with unregulated [cryptocurrency trading platforms] and the need for proper regulation to maintain market confidence. It also shows that dissemination of information to the investing public through the Alert List, warnings, and investor education can be further enhanced to help members of the investing public better understand the potential risks[…].

While JPEX blamed third-party market makers and regulators for the crisis, the SFC had previously warned that the exchange had been operating without a license. The Hong Kong police have also received more than 2,200 complaints related to JPEX, and 11 individuals connected to the exchange have been taken into custody for questioning.

In a blog post, JPEX attributed the liquidity crisis to a series of unfortunate events, including market volatility and regulatory pressures. Investors and traders have been advised to exercise caution and refrain from making any transactions on the platform until further notice. The situation has also prompted discussions about the inherent risks associated with cryptocurrency exchanges and the need for stringent regulatory oversight to ensure their stability and security.

The announcement further added that the SFC is collaborating with local law enforcement to establish a dedicated channel for citizens to report suspicious activities related to VATPs. This move is part of a broader effort to maintain market confidence and protect investors from the risks associated with unregulated crypto platforms.

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